Volvo's electric stance may clean up car act

The latest forecast is more aggressive than projections made by the International Energy Agency (IEA).Unless the runaway growth of automobiles run on fossil fuels eases off, particularly in China and India, carbon dioxide emissions from cars and motorbikes will continue well into the latter half of the 21st century.

It is in this context that the announcement by Volvo to phase out cars powered by petrol and diesel assumes importance. It could be the beginning of the end of the internal combustion engine that is responsible for as much as 12 per cent of global greenhouse gas emissions.

Volvo Cars said this month that all the models it will introduce from 2019 will be either hybrids or powered solely by batteries.

"This announcement marks the end of the solely combustion engine-powered car," Håkan Samuelsson, President and Chief Executive, said in a statement. By 2025, Volvo hopes to sell one million electric cars.

Although most major automakers such as Toyota, Ford and General Motors offer hybrids and battery-powered options, none has so far been willing to stop production of cars powered solely by petrol or diesel.

The decision by the Sweden-based and Chinese-owned car company known for its safety standards is the boldest commitment yet to technologies that may represent a minuscule share of the current vehicle market but is increasingly seen as critical to fighting climate change and urban air pollution.

Electrified cars are of two varieties. Hybrids, which combine battery power with petrol- and diesel-powered engines, are the most popular.

The Toyota Prius, which has achieved cult status since it was introduced in 1997, has sold over 10 million units. Cars that run wholly on battery power are still rare because they are relatively expensive, take a long time to recharge and have limited mobility ranges, such as India's Mahindra Reva, introduced in 2001.

However, most automakers expect the share of electric cars to grow rapidly in the coming years, as the technology improves, prices fall and public charging stations become more commonplace.

India can save 64 per cent of anticipated passenger road-based, mobility-related energy demand and 37 per cent of carbon emissions in 2030 by pursuing a shared, electric and connected mobility future, according to a report prepared by policy think tank Niti Aayog and Rocky Mountain Institute (RMI), a US-based research organisation."Consumer demand is starting to shift in favour of electrified vehicles and has strong disruption potential," McKinsey and Company said in a report early this year. Electric cars will outsell fossil fuel-powered vehicles within two decades as battery prices plunge, Bloomberg New Energy Finance (BNEF) said in a forecast in July 2017.

"By 2040, 54 per cent of new car sales and 33 per cent of the global car fleet will be electric," BNEF said in its outlook. "Falling battery prices will bring price-competitive electric vehicles to all major light-duty vehicle segments before 2030, ushering in a period of strong growth for electric powertrain vehicles." Electric cars will reach price parity by 2021, it added.

The latest forecast is more aggressive than projections made by the International Energy Agency (IEA).

Surging investment in lithium-ion batteries, higher manufacturing capacity at companies, including Tesla and Nissan Motor, as well as emerging consumer demand from China to Europe support these projections, BNEF said. In just eight years, electric cars will be as cheap as petrol vehicles, pushing the global fleet to 530 million vehicles by 2040.

There are many challenges ahead for electric cars but they have caught on much faster than was thought earlier. There were two million electric cars on the roads last year, up 60 per cent from 2015, according to the Global EV Outlook 2017 by IEA.

Lithium-ion cell costs have already fallen by 73 per cent since 2010 and further steep declines in average prices are predicted over the next two decades.

Volvo's gamble could be largely motivated by the recent surge in demand for electric vehicles in China, which is driven by high subsidies offered by the government. Volvo was sold to China's Zhejiang Geely Holding group in 2010.

China overtook the US in 2009 as the world's largest auto market in terms of the number of family vehicles sold.

The world's second-largest economy wants 11 per cent of all car sales to be electric by 2020. This should add up to nearly three million such vehicles sold annually, according to a report by Research In China, a think tank based in Shanghai.

The Indian government also is keen to proactively promote electric cars. The world's fastest-growing major economy wants all cars in the country to be powered by electricity by 2030.

"The idea is that by 2030, not a single petrol or diesel car should be sold in the country," Energy Minister Piyush Goyal said in April this year.

India's ambitious plan to sell only electric cars by the end of next decade would require nearly eight times the global stock of such vehicles, according to IEA. The country would need to sell more than 10 million electric cars in 2030, compared with the almost 1.3 million on the road worldwide in 2015, IEA has been quoted as saying.

India can save 64 per cent of anticipated passenger road-based, mobility-related energy demand and 37 per cent of carbon emissions in 2030 by pursuing a shared, electric and connected mobility future, according to a report prepared by policy think tank Niti Aayog and Rocky Mountain Institute (RMI), a US-based research organisation.

"These are the types of ambitious targets that drive transformations," said Clay Stranger, Director at RMI.

Prices of most SUVs were cut between Rs 1.1 lakh and Rs 3 lakh following the implementation of GST, which subsumed over a dozen central and state levies like excise duty, service tax, and VAT from July 1.